Question : A current account deficit indicates that a country is spending more on __________than it is earning from__________.
Option 1: exports, imports
Option 2: goods, services
Option 3: capital, financial
Option 4: imports, exports
Correct Answer: imports, exports
Solution : The correct answer is (d) imports, exports
A current account deficit indicates that a country is spending more on imports (goods and services) than it is earning from exports. In other words, the value of a country's imports exceeds the value of its exports, resulting in a deficit in the current account. This deficit represents a net outflow of domestic currency to pay for the excess imports, which needs to be financed by capital inflows or borrowing from other countries.
